DREADNOUGHT RESOURCES LTD — Interim / Quarterly Report 2010

Oct 28, 2010

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M I N I N G
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QUARTERLY REPORT

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Period ending 30 September 2010
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HIGHLIGHTS

• Mining activities at the Georgetown Alluvial Gold Operations in northern Queensland continue.

• Company achieves gold sales of $142,000 for the September quarter.

• Company commits to the sale of the Georgetown Gold Operations to concentrate on prospective exploration portfolio.

• Georgetown site visits completed by two interested parties.

ERO Mining Limited ACN 119 031 864

62 Beulah Road Norwood South Australia

PO Box 3126 Norwood SA 5067 Phone +61 8 8132 7970

Fax +61 8 8132 7999 Email info@eromining.com

Web www.eromining.com

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Georgetown
Tanami
Eromanga
Basin
Abminga
Billa Kalina
Gawler Marree
Craton
NSW
Image: Exploration activities,
Georgetown Regional Gold. Location of projects.
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1

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

REVIEW OF OPERATIONS

CORPORATE ACTIVITIES

Corporate activities have focussed on advancing the approvals process on the tenements in the Tanami Region of the Northern Territory, progressing the sale process for the Georgetown Gold Operations and the transaction to acquire 100% of the capital of South East Energy Limited, as disclosed in the ASX release dated 12 October 2010.

New direction for ERO

Post September 30, ERO Mining has announced a change in core focus, with agreement to acquire 100% of the issued capital of South East Energy Limited, an unlisted South Australian based lithium and uranium explorer. ERO will acquire with South East, a package of highly prospective lithium exploration acreage at Lake Frome and Lake Torrens in northern South Australia and its uranium-focussed Padthaway project in the South East of South Australia.

The world-class northern tenements are highly prospective for accumulations of lithium in brine charged sediment at a time when the past decade has seen phenomenal growth in the demand for lithium for both traditional uses such as in the production of glass, ceramics and aluminium, as well as for the production of lithium batteries for use in hybrid electric vehicles, mobile phones, laptops and other electronic devices.

The transaction will see ERO redirect its primary focus to exploration for lithium at Lake Frome and Lake Torrens, although work will continue on the Company’s other existing assets.

To acquire South East Energy, ERO will issue 4.5 new ERO shares for every existing South East share and 4.5 new ERO options exercisable at 5 cents each on or before 31 October 2011 for every existing SEZ Option.

The proposal will be put to ERO shareholders for approval at a general meeting, details of which will be announced shortly.

Finance

As at 30 September 2010, ERO Mining had available funds of $214,685 which is held at call with Australian banks. Subsequent to the end of the quarter, ERO Mining finally received a rebate of $263,000 owed to it by the Australian Taxation Office, under the Federal Government’s Research and Development Tax Concession Program. This rebate reflects research and development conducted in 2008–2009 by the Company on several of its projects. Also subsequent to quarter end, the Company received revenue of $58,600 from the sale of approximately 51 ounces of gold dore from the Georgetown Gold Operations.

Operations

GEORGETOWN GOLD OPERATIONS

ERO Mining 100%

The Georgetown Alluvial Gold Mine and surrounding exploration areas are located to the south–southwest of the township of Georgetown in central–northern Queensland. Georgetown is approximately 375 km by sealed road, or five hours west of Cairns (Figure 1). The project comprises the alluvial gold mine and the surrounding granted exploration licence, EPM15995. The mining operation consists of thirteen (13) granted mining leases, covering a total 389.39 hectares, which are positioned over alluvial wash within Tabletop Creek and the un-mined headwaters of the adjacent Western Creek (Figure 2). The gold recovery plant is currently positioned at the western limits of ML30091 with all mining activities occurring entirely within this tenement.

The Company has recently completed a heritage survey with the traditional landowners, and is now in receipt of the final survey report which allows access to un-mined alluvial terraces to the south and eastern portions of ML30091, where the Company is currently operating the gold recovery plant. When the current mining areas are exhausted of suitable material, and upon final completion of rehabilitation of those areas, the Company will source alluvial wash from these new terraces. The estimated volume of alluvial wash in these new areas is considered sufficient to supply the needs of the gold recovery plant for the remainder of 2010. The grade of these new areas is estimated, based upon previous data, to be within the range of 0.45 to 0.60 grams of gold per loose cubic metre (lcm).

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 Cairns
0 50km
-18 °
 Georgetown
GEORGETOWN
PROJECT
  Townsville
-20 °
 Charters Towers
144 ° 146 ° 148 °
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Figure 1 Location of the Georgetown Gold Project.

2

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

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EPM15995
ML6721
MLA30227
Airstrip ML30148
ML30091
Right Hand Bend ML30084
ML30017
Prospect See Figure 3
Confluence ML30019
ML3498
EPMA18130 Prospect ML3487
-18°30' ML30122
ML30124 ML30018
ML3488
Exploration Permit - Minerals (EPM)
Mining Lease (ML)
EPM
0 2 km
EPM/ML Application 15995
Tabletop Creek
ML3539
143°20' 143°30'
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Figure 2 Location of the 13 mining leases and Airstrip mining lease application area.

At the Airstrip mining lease application area, recent photo interpretation has highlighted two areas containing potentially significant volumes of alluvial wash that require further evaluation, to determine prospectivity. The areas have been named the Right Hand Bend, and Confluence Prospect, and are contained within EPMA18130 (ERO Mining 100%), (Figure 2).

During the September quarter, gold sales totaled $142,561 from the production of 110 ounces of fine gold.

GEORGETOWN GOLD OPERATION – FUTURE OPTIONS

As previously reported, the Company is in receipt of several unsolicited offers to purchase the operation, and, following a review of operations, the Company believes that the sale is in the best interests of shareholders in order to focus efforts on the Company’s highly prospective Tanami and Gawler Craton IOCGU projects. The Company has hosted site visits to Georgetown with two interested parties.

Exploration Activities

GEORGETOWN REGIONAL GOLD EXPLORATION

ERO Mining Ltd 100% in EPM15995

True Blue and The Tunnels Prospects

True Blue Prospect is located within the granted EPM15995. The prospect area is located in the headwaters of a tributary of Tabletop Creek and contains a cluster of pits and shallow workings associated with mining during the 1930s (Figure 3).

During 2009, the Company completed a surface rock chip sampling program designed to validate results from previous exploration completed in the 1980s. A total of 17 samples was collected from spoil heaps associated with shafts and adits at the True Blue Main and The Tunnels historic workings. The results ranged from a low of 0.03 g/t up to 33.72 g/t gold with six samples returning values in excess of 4 g/t Au.

ERO Mining is targeting shallow high grade gold mineralisation beneath historic mine workings at both prospects which we believe would be suitable for toll treatment through the Georgetown CIP Plant currently under refurbishment by Deutsche-Rohstoff Australia Pty Ltd.

The drilling program at True Blue has been deferred pending the outcome of the proposed sale of the Georgetown Gold Operation.

3

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

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Costean Grade Gold gm/BCM 'True Blue''True Blue''True Blue''True Blue' -18º29'
>1 ProspectProspectProspectProspect
0.68
0.8 to 1
0.6 to 0.8
0.4 to 0.6 MMM M MMM M 0.65
0.2 to 0.4 The Tunnels MMM M MMM M 0.61
0.51
True Blue Main MMM M 0.60
0.94 MMM M MMM M
MMM M 0.56 0.59
0.55
1.0 MMM M 0.38
0.48
1.10
EPM15995
1.27
-18º30'
1.07
1.20
Mining Lease
Exploration Permit - Minerals
0.61
MMM M Historic workings
0 500 m Costean (representative : Not to scale)
1.27 Grade Gold gm/BCM (Bank Cubic Metres)
ML30124
143º25' 143º26' 143º27'
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Figure 3 Location of bulk sampling sites, Georgetown Gold Operations.

TANAMI EXPLORATION INITIATIVE Objectives

The Tanami Region, located approximately 600 km northwest of Alice Springs, in the Northern Territory, has become Australia’s premier Proterozoic gold province, with virtually all discoveries made since the mid-1980s. The Tanami Region is one of the last remaining provinces in Australia capable of hosting multi-million ounce gold deposits. The Tanami is currently the host to the Callie Gold Mine, containing 7 Mozs of gold, and several other 0.5 Mozs to 1 Mozs deposits. Despite the operation of major processing facilities and considerable gold production the Tanami remains sparsely explored, and ERO Mining considers the probability for further discoveries to be high. Outcrop in the region is poor, and this has lead to a lack of geological knowledge. While the discovery history of the Tanami has been essentially continuous since the mid 1980s, proprietary information on discoveries has been closely guarded. The release, by major gold companies, of large areas of highly prospective land in the Tanami has rapidly resulted in a significant increase in exploration activity across the Tanami and further supports the Company’s exploration strategy in the region.

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S U P L E J A C K
S T A T I O N EL27806
Talbot North
Groundrush Mine
G
ELA27430 ELA27921
Tanami West Groundrush South
-20° G Tanami ELA26625 ELA27997
Mine
Suplejack Mt Solitaire
 Rabbit Flat Roadhouse
The Granites
Callie Gold Mine E G Gold Mine
ELA27995
Officer Hill South
-21°
ELA27511
Highland Rocks
0 40 km
Granted Exploration Licence
E Mine
Exploration Licence Application
G Mine (disused)
Pastoral Lease
Rd
Tanami
Road
Lajamanu
130° 131°
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The team at ERO Mining has extensive experience in the discovery, and subsequent development of gold deposits in the Tanami, and is applying this knowledge to identify key areas for detailed assessment.

Figure 4 Location of ERO Mining tenements in the Tanami region.

4 ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

ERO Mining’s approach is to undertake mineral systems analysis of each deposit style in the Tanami. These detailed studies lead to a predictive mineral discovery model. This model is tested against open file geophysical, geochemical and geological data, and if the model is validated, tenements are acquired, either by application, or Joint Venture Agreement with the tenement holders.

Over the past two years, the Company has assembled a portfolio of seven carefully selected project areas (Figure 4) and has been progressing each of these projects through the approvals process. The individual projects are discussed in more detail below. The Company is pleased with the progress made to date, as evidenced by the recent grant of the Talbot North Exploration Licence and the anticipated near term approval of the Deed of Exploration over the Suplejack gold/ uranium project.

Suplejack

ERO Mining 100% in EL26625

The Suplejack Project covers an area of 168 sq km and is situated approximately 30 km east of the Tanami Gold Mine owned by Tanami Gold. The Company considers this tenement to be prospective for both high grade, unconformity related uranium mineralisation and gold deposits of the Ranger and Callie Styles respectively (Figure 5).

Previous exploration within the tenement has confirmed the presence of Gardiner Sandstone, in unconformable contact with the poly deformed and folded Dead Bullock Formation. The tenement area is also traversed by the Suplejack Shear Zone, a major north–south trending crustal scale structure, known to be a critical element in the formation of gold and uranium deposits in the region.

The final meeting for Aboriginal approval of the Deed of Exploration was conducted on the 29th June 2010. The Company is awaiting formal notification, from the Central Land Council, of the outcomes of this meeting but remains very confident that the notification of acceptance of the Deed of Exploration will be forthcoming in the very near future.

In the interim, the Company has been given approval to conduct an airborne EM survey over the project area. This survey is designed to identify zones of graphic shale juxtaposed against major structural breaks that represent sites for the development of unconformity related uranium mineralisation. The EM survey will also assist in the definition of drill targets for gold mineralisation within the fold hinges of the underlying Dead Bullock Formation sediments.

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-19°40'
Groundrush
780,000ozs
  
  
Ripcord
20,000ozs
EL27921 -19°50'
Groundrush
EL26625
Suplejack
-20°
Challenger 2
   6m@1.5 g/t + U
0 5 km
Figure 5 Suplejack – magnetic image with gold deposits and
mineralised drill intercepts.
130° 130°10'
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Talbot North

ERO Mining 100% in EL27809

The Talbot North Project covers an area of 69 sq km and is located on Suplejack Downs Pastoral Lease. The lease area is along strike to the north of ABN Resources Hyperion Project (Figure 6) where the Company has recently announced encouraging results from its review of previous exploration data. This earlier work has been successful in identifying multiple areas of significant gold mineralisation, including an intersection of 28 m @ 5.07 g/t gold at the Hyperion Prospect. ERO Mining will be targeting de-magnetised zones within favourable portions of this gold bearing sequence.

The Company’s Exploration Licence application over the Talbot North Project has now been granted. As the licence area is entirely within pastoral lease, rather than Aboriginal freehold land, the processes required for heritage clearance and approval for on ground exploration are greatly accelerated. As the first stage of exploration, a focussed airborne EM survey will be conducted to better define the non-magnetic stratigraphy and assist in identification of follow-up drill targets.

5

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

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-19°20'
Tregony 
55,000ozs
SUPLEJACK PASTORAL LEASE
EL27806
Talbot North
-19°30'
Hyperion
28m@5.07g/t
Jasper Hill
14m@1.37g/t
   Hyperion South
Stoney Ridge
The Grange  12m@1.82g/t
3m@8.53g/t 
Brokenwood
Groundrush
-19°40'
780,000ozs

 0 5 km
Ripcord
20,000ozs
130° 130°10'
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Figure 6 Talbot North – magnetic image with gold deposits and mineralised drill intercepts.

Tanami West

ERO Mining 100% in EL27430

The Tanami West Project covers an area of 58 sq km and is located approximately 10 km to the northwest of the Tanami Mine which has recently been purchased by Tanami Gold Limited with a view to recommencing mining operations in the near future.

The NT Mining Minister has consented to the Company entering into negotiations with the Traditional Owners, and ERO Mining has submitted an Exploration and Mining Proposal which has been accepted. ERO Mining will shortly outline its proposal to Traditional Owners in an on country meeting, yet to be scheduled.

Groundrush South

ERO Mining 100% in EL27921

The Groundrush South Project covers an area of approximately 70 sq km. The lease area covers the southeastern extensions of the host rocks and structures that control the 0.75 million ounce Groundrush gold deposit. Regional magnetic data indicates that this geological setting continues through the tenement under a thin veneer of cover.

The NT Mining Minister has consented to the Company entering into negotiations with the Traditional Owners. An Exploration and Mining Proposal has been lodged.

Officer Hill South

Highland Rocks

ERO Mining 100% in EL27511

The Highland Rocks Project covers an area of 484 sq km and is located approximately 70 km southeast of Newmont’s multi-million ounce Callie Gold Mine. The area of this tenement application is one of the very few areas of the Tanami that has not been subjected to any modern exploration. Recent mapping by the NT Geological Survey has highlighted the presence of large crustal scale structures hosting very significant quartz vein development within host rocks of green-schist grade metamorphism. All these geological features are fundamental elements in the development of major gold systems in the Tanami.

ERO Mining 100% in EL27995

The Officer Hill South Project covers an area of 128 sq km and is located approximately 40 km south of Newmont’s Callie Gold Mine. The lease area covers the same stratigraphic sequence to that which hosts the Callie gold deposit and is within an area of known gold anomalism in soils.

The NT Mining Minister has consented to the Company entering into negotiations with the Traditional Owners, and ERO Mining has submitted an Exploration and Mining Proposal. A meeting with the Traditional Owners is yet to be scheduled.

Mount Solitaire

The NT Mining Minister has consented to the Company entering into negotiations with the Traditional Owners, and ERO Mining has submitted an Exploration and Mining Proposal which has been accepted. After delays requested by the Traditional Owners, the first meeting is scheduled for March 2011.

ERO Mining 100% in EL27997

The Mount Solitaire Project covers an area of 187 sq km and is located 90 km to the northeast of the Granites Gold Mine. The lease area targets an area of major favourable large scale structures and hosts several multi-kilometre long quartz vein arrays.

The NT Mining Minister has consented to the Company entering into negotiations with the Traditional Owners. An Exploration and Mining Proposal has been lodged.

6 ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

BILLA KALINA

ERO Mining earning 50% under the terms of the Billa Kalina JV from Maximus Resources Ltd in ELs 3526, 3525, 4463 and 4468, ELAs 78/10 and 33/10, ERO Mining 100% in ELA 32/10

Peeweena Dam

The Billa Kalina Project is located 70 km north–northwest of the Olympic Dam iron-oxide–copper–gold–uranium (IOCGU) mine, and 45 km east of Prominent Hill, South Australia (Figure 7). ERO is exploring for IOCGU deposits.

Recent detailed analysis of all previous gravity survey data at Billa Kalina has highlighted a potentially significant single point gravity anomaly at Peeweena Dam, proximal to the western margin of EL 3338 (Figure 7). The anomalous point has an amplitude of approximately 10 mgal and was originally recorded within a 6–7 km spaced gravity survey completed by the Bureau of Mineral Resources. Based upon nearby drilling undertaken by the Company, ERO Mining interprets the anomaly to lie adjacent to a major structurally controlled contact between Archaean basement to the west and Proterozoic/Palaeozoic sediments to the east.

The area of interest to ERO Mining lies approximately 12.5 km south of the 30 degree south latitude and therefore falls within the recently defined Restricted Zone of the larger

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- 29°
EL3526
Woomera
Prohibited
Area
- 29°30'
EL3525
0 20 km
EL3170
 "Billa Kalina"
BK DDH1&2
-30°  "Millers Creek" ACCESS RESTRICTED
SOUTH OF 30°
ELA32/10   Peeweena DamPeeweena DamPeeweena DamPeeweena Dam
Gravity FeatureGravity FeatureGravity FeatureGravity Feature
EL3338
ELA33/10
136° 136°30'
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Woomera Prohibited Area (Figure 7). Under newly formulated guidelines the Company must submit, to the Defence Department, a detailed exploration program for consideration by all relevant authorities before exploration can proceed. ERO Mining, on behalf of the joint venture partners, has submitted a request to undertake a small gravity survey to confirm, and better define, the anomaly and if justified to complete a single drillhole to evaluate the target for IOCGU mineralisation.

ERO Mining has received notification of the Defence Department’s review of the submission for access into the Woomera Prohibited Area (WPA) for the purpose of exploration activities. The Defence Department reiterated that the location of the Peeweena Dam gravity anomaly, and the proposed gravity survey and subsequent drilling, do raise some concerns. They have requested further clarification of several points from the submission, which the Company has supplied.

Given that the area of interest to ERO Mining lies very close to the margin of the Restricted Zone, the Company is hopeful that permission to proceed will be forthcoming from the Defence Department. In such an event, the Company will immediately embark on the ground gravity program to validate the single point gravity anomaly (Figure 8).

The Peeweena Dam gravity anomaly has not been subjected to drill testing in the past, and represents a unique discovery opportunity for the Company within the highly prospective Gawler Craton.

The anomalous data point that defines the Peeweena Dam target has amplitude of approximately 10 mgal, and is based upon a single data reading from 6–7 km spaced gravity stations. The survey was conducted by the Bureau of Mineral Resources. The gravity feature is located adjacent to a major northeast trending structure, separating the contact between to Archaean basement to the west, and Proterozoic– Palaeozoic sediment to the east, within the regionally dominant northwest trending G2 structural corridor.

Significant single point gravity data from the same regional dataset highlighted both the Olympic Dam and Prominent Hill Deposits, prior to their eventual discoveries (Figure 8).

Should the Company receive a positive response to its exploration submission, the Peeweena Dam Prospect would become a priority exploration program for ERO Mining.

Figure 7 Location of Peeweena Dam.

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010 7

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GRAVITY
- 29° High
0 25 km
G A W L E R
 Prominent Hill
Low
- 30°
 Peeweena Dam
C R A T O N
Olympic Dam 
135° Exploration licence 136° 137°
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Figure 8 Peeweena Dam single point gravity anomaly.

EROMANGA BASIN JOINT VENTURE

ERO Mining earning 70% under the Eromanga Basin JV Agreement with Maximus Resources Limited in the Abminga, Marree and Kingoonya Projects

Abminga and Marree Projects

During the quarter, no significant ground based exploration activities were undertaken at the Abminga and Marree Projects. This is in line with the Company’s previously announced intention to focus, in the near term, on consolidation of its gold exploration portfolio and advancing our Suplejack Project in the Northern Territory.

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Stephen Hogan EXPLORATION MANAGER 29 October 2010

DISCLAIMER

This report contains forward looking statements that are subject to risk factors associated with the exploration and mining industry.

It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables which could cause actual results or trends to differ materially.

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Stephen Hogan who is a Member of the Australasian Institute of Mining and Metallurgy, and who has sufficient experience relevant to the style of mineralisation, the type of deposit under consideration, and the activity he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves (the JORC Code). This report is issued in the form and context in which it appears with the written consent of the Competent Person, who is Exploration Manager of the Company.

For further information please contact:

ERO Mining on 08 8132 7970, or

Investor relations:

Mr Duncan Gordon

Executive Director, Adelaide Equity Partners on 08 8232 8800 or 0404 006 444

Further information relating to ERO Mining Limited and its various exploration projects can be found on its website:

www.eromining.com

8

ERO Mining Ltd • Quarterly Report for the period ending 30 September 2010

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

	Name of entity		Quarter ended (“current quarter”) 30 September 2010	Quarter ended (“current quarter”) 30 September 2010
	ERO Mining Limited
	ABN 40 119 031 864 Consolidated statement of cash flows
			30 September 2010
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows		Current quarter $A’000		Year to date (3 months) $A’000
		143 (141) (59) (165) 1		143 (141) (59) (165) 1
		(221)		(221)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)		75		75
		75		75
		(146)		(146)

• See chapter 19 for defined terms.

Appendix 5B Page 1

30/9/2001

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(146)	(146)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net financing cash flows
	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(146) 361	(146) 361
	215	215

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
			-
1.25 Explanation necessaryfor an understandingof the transactions Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest		Explanation necessaryfor an understandingof the transactions
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest

• See chapter 19 for defined terms.

Appendix 5B Page 2

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1	Loan facilities
3.2	Credit standby arrangements

Amount available	Amount used
$A’000	$A’000

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	25
	100
	50
Total	175

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	215	361
Total: cash at end of quarter(item 1.22)	215	361

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	EL27806 (NT)	Granted 14/07/10	-	100%

• See chapter 19 for defined terms.

Appendix 5B Page 3

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs, redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	160,175,576	160,175,576
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	26,785,714 228,000 225,000 553,000 941,666		Exercise price $0.30 $0.22 $0.22 $0.165 $0.028	Expiry date 30/06/2011 20/03/2012 19/11/2012 05/03/2013 03/02/2014
7.11 Debentures (totals only)

• See chapter 19 for defined terms.

Appendix 5B Page 4

30/9/2001

Appendix 5B Mining exploration entity quarterly report

7.12 Unsecured notes (totals only)

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: (Company Secretary)

Date: 29 October 2010

Print name: David W Godfrey

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

• See chapter 19 for defined terms.

Appendix 5B Page 5

30/9/2001